Partnership

Dissolution

Medium

common

At the time of the dissolution of a partnership firm in which X, Y and Z were partners sharing profit in 2:2:1 ratio, the following information was made available. Arrange them in the sequence in which they will be paid.

(A) A's Loan to the firm Rs 50,000

(B) Creditors Rs 2,00,000

(C) A's Capital Rs 2,50,000 , B's Capital Rs 2,00,000 and C's Capital Rs 1,00,000

(D) Balance available after settlement of all the stakeholders.

Choose the correct answer from the options given below:

(A), (B), (C), (D)

(A), (B), (D), (C)

(B), (A), (C), (D)

(B), (C), (A), (D)

✅ Correct Option: 3

Section 48 fixes the order of application of assets. Outside creditors rank first (B), because third parties must be satisfied before insiders. Next comes a partner's loan to the firm (A), which is a debt but subordinate to outsiders. Partners' capitals are repaid after that (C), and any residue (D) is finally divided among partners in their profit sharing ratio.

Note: The partners are named X, Y and Z in the preamble but A, B and C in the items. We have read them as the same three partners.

2025: 29 May Shift 2

According to which section of the partnership Act 1932, the dissolution of a partnership between all the partners of a firm is called the dissolution of the firm?

2026: 29 May Shift 1

Match List-I with List-II

List-I (Amount/Activity at the time of dissolution)	List-II (Accounting Treatment)
(A) Partner's Loan	(I) Is capital loss for the firm
(B) Balance of Realisation Account	(II) Is debited to realisation account
(C) Realisation expenses paid	(III) Is not recorded in the realisation account
(D) Deficiency of capital account of partner	(IV) Is transferred to partner's capital account

Choose the correct answer from the options given below:

2025: 31 May Shift 1

Which combination of statements is true about dissolution-

(A). Dissolution of a partnership is different from dissolution of a firm.

(B). A partnership is dissolved when there is a death of a partner.

(C). A firm is dissolved when all partners give consent to it.

(D). A firm is compulsorily dissolved when a partner decides to retire.

Choose the correct answer from the options given below:

2026: 11 May Shift 1

In case of dissolution of a firm, the assets of the firm, including any sum contributed by the partners to make up deficiencies of capital, shall be applied in the following manner and order:

A. In paying to each partner proportionately what is due to him on account of capital.

B. The residue, if any, shall be divided among the partners in their profit sharing ratio.

C. In paying each partner proportionately what is due to him/her from the firm for advances as distinguished from capital i.e. partner's loan.

D. In paying the debts of the firm to third parties.

Choose the correct sequence from the options given below:

2023: 11 June Shift 3

Realisation A/c is debited with __________ on the dissolution of firm.

2025: 14 May Shift 1

On dissolution of a firm, partner's loan account is transferred to:

Solution

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